In brief 9 min read
ASIC takes 'no action' position on virtual meetings but no such luck for electronic signatures; Fair Work Act amendments clarify the definition of casual employment; ASX Listing Rule amendments to commence from 5 June 2021; ASX updates Guidance Note 19: Performance Securities; Takeovers Panel remakes procedural rules; APRA provides guidance to ADIs on the use of indemnities in divestment transactions.
ASIC: 'No action' position taken in relation to virtual member meetings; no such relief for electronic signatures
Following the lapse of temporary modifications to the Corporations Act, and with new legislation stalled in the Senate, ASIC has announced that:
- It will take a 'no action' position in relation to the convening and holding of virtual member meetings. The no action position will apply to support the holding of meetings by technology, the issue of electronic notices, and to allow public companies an extra two months to hold their AGMs. The no action position will apply until the earlier of 31 October 2021 or the date on which Parliament passes measures allowing the holding of virtual shareholder meetings. ASIC stated its position is to 'provide the market with a degree of certainty', however the regulator has also acknowledged it is limited from alleviating otherwise mandatory requirements of the Corporations Act and provided its own significant warning – that its position would not necessarily stop other parties taking their own action or the court making a finding otherwise.
- It will not take a 'no action' position in relation to electronic signing of documents. ASIC declined to take a no action position on this matter as the electronic execution of documents relates to third party rights, rather than regulatory matters to be enforced by ASIC. However, developments continue at the state level, and market practice in the area continues to evolve – you can stay on top of current developments in this space by following our Signing documents in a pandemic.
Employment: Legislative clarification of casual employment; end of temporary JobKeeper flexibilities
The Federal Parliament passed the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021 (Cth). The key aspect of the amending Act (which represents a vastly slimmed down version of the Government's original intentions) is to introduce a definition of 'casual employee', following uncertainty arising from several decisions of the Federal Court in recent years.
Under the amended Fair Work Act 2009 (Cth) (Fair Work Act), a casual employee is a person who:
- is offered employment on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern; and
- accepts the offer on that basis.
In determining whether an employer makes a firm advance commitment to continuing and indefinite work, the only criteria that may be considered are whether:
- the employer can elect to offer work (and whether the employee can accept or reject that work);
- the employee is required to work as required by the employer;
- the arrangement is described as casual employment; and
- the employee will be entitled to a casual loading or a specific casual rate of pay.
It is important to note that the question of whether an employee meets the statutory definition of 'casual employee' will be determined at the time of offer and acceptance. The subsequent conduct of the parties will not be relevant to this determination.
Amongst other things, the amending Act also:
- creates a positive obligation for employers to make an offer of permanent employment to a casual employee where:
- the employee has been employed by the employer for 12 months; and
- during at least the last six months of that period, the employee has worked a regular pattern of hours on an ongoing basis which, without significant adjustment, the employee could continue to work as a full-time or part-time employee;
- preserves the residual right of a casual employee to request conversion to permanent employment already contained in a number of modern awards;
- requires employers to issue new employees with a Casual Employee Information Statement (which will be prepared by the Fair Work Ombudsman); and
- contains provisions allowing a court to off-set casual loadings paid to employees against claims for entitlements such as annual and personal leave, in circumstances where a person employed as a casual is later found to be a permanent employee.
In other news, the end of the JobKeeper scheme signals the end of certain JobKeeper-related provisions of the Fair Work Act that facilitated various workplace flexibilities during the pandemic. The provisions of the Fair Work Act that have come to an end include those that enabled employers to:
- give JobKeeper-enabling stand down directions;
- issue JobKeeper-enabling directions for an employee to change their duties or work location; and
- make JobKeeper agreements with employees to work on different days or at different times.
This means that any directions or agreements made under these provisions of the Fair Work Act no longer apply from 29 March 2021. If employers wish to issue new directions or enter into new agreements relating to these matters, this may only be done where permitted under an employment contract, applicable enterprise agreement or award, or the Fair Work Act.
However, changes that were made to a number of modern awards in response to the pandemic, such as changes relating to unpaid pandemic leave, have been further extended until 31 December 2021. Generally speaking, these variations will continue to:
- allow an employer and an employee to agree to the employee taking double the amount of annual leave at half pay; and
- provide employees with an entitlement to two weeks' unpaid pandemic leave if they are:
- required by government or medical authorities, or acting on the advice of a medical practitioner, to self-isolate and therefore cannot work; or
- otherwise prevented from working due to measures taken by government or medical authorities in response to COVID-19.
Some changes applicable to modern awards in the health and aged care sectors have not been extended and came to an end on 29 March 2021.
ASX: Listing Rule amendments; new Guidance Note 19: Performance Securities; extension to complete compliance course
A series of Listing Rule changes will come into effect from 5 June 2021, following a series of consultations. The listing rule changes will simplify notice requirements, including through the introduction of online smart forms for the notification of security issues and corporate action timetables.
The changes include a raft of amended notification requirements including for buy-backs (LR 3.8A), where a company issues, converts or cancels securities and payment timing (LR 3.10), and changes to the timetables for corporate actions (including allowing an additional two business days to announce the results of certain actions). The ASX also released clarificatory amendments to the definition of 'employee incentive plan' that clarify the potential participants and the application to plans involving non-executive directors. The ASX also released a related suite of nine new and amended listing rule appendices, including Appendix 3B for the issue of securities.
Additionally, the ASX released a new Guidance Note 19: Performance Securities, which includes new guidance in relation to agreements to the issue or transfer of ordinary shares, a new defined term 'Arm's length control transaction securities', where shares are offered pursuant to a takeover bid, and a new defined term 'ordinary course of business acquisition securities', which applies outside a re-compliance listing where the issue is the (or part of the) consideration linked to the acquisition of a business or undertaking.
The ASX also extended the deadline to complete the compliance course for persons responsible for communication with the ASX in relation to Listing Rule matters by a further 12 months to 1 July 2022. This extension is due to delays in appointing an online education vendor to prepare the online training course.
The Panel remade its Procedural Rules. The Takeovers Panel Procedural Rules 2020, which commenced on 1 April 2021, were viewed by the Panel and public submissions as operating effectively and efficiently, and therefore no significant amendments to the existing Procedural Rules were made. The notes to the Procedural Rules have been removed and incorporated into a new Procedural Guidelines document.
ACCC: NAB's acquisition of neobank 86 400 not opposed; airline cooperation re-authorised; consultation on draft authorisation for new gas field
The ACCC has cleared NAB's proposed acquisition of small digital-only bank, 86 400, concluding that the transaction is unlikely to substantially lessen competition. The ACCC formed the view that 86 400's share in the relevant markets is low and its product offerings face competition from other disruptive market participants (eg other neobanks, non-bank lenders and second-tier banks). ACCC Chair Rod Sims noted that the ACCC would continue to closely scrutinise acquisitions of emerging competitors, particularly by major banks.
The ACCC re-authorised the alliance between Qantas and American Airlines for a further five years, enabling the parties to cooperate (eg in relation to marketing and sales, freight, pricing, scheduling and lounges) over Trans-Pacific routes between Australia/New Zealand and the US, Canada and Mexico. The ACCC accepted that the alliance is unlikely to result in any significant public detriment because American Airlines would, without the alliance, be unlikely to operate its own Trans-Pacific services, or to expand its Trans-Pacific capacity and frequency.
The ACCC is consulting on a draft determination which proposes to authorise Vintage Energy, Metgasco and Bridgeport entering into joint marketing arrangements. The three companies are currently JV partners in the 'Vali field', a new early stage gas field development in the Queensland Cooper/Eromanga Basin. Authorisation would allow the parties to jointly market gas eventually produced from the Vali field and to enter into gas supply agreements on common terms (including price) for five years. The ACCC observed that the small amount of gas to be jointly marketed means that the proposed arrangement is unlikely to adversely impact competition and that the arrangement would provide public benefits by enabling new gas supply into the market at an earlier stage.
In enforcement news, Adventium paid approximately $6.5 million in payments to over 350 Australian tour operators following a concluded investigation by the ACCC. In April 2020, Adventium announced it would withhold funds received through its 'Website Travel' platform that were owed to tour operators, citing the COVID-19 pandemic as its reason for doing so. The ACCC was concerned that Adventium was withholding these payments at a time when COVID-19 had already impacted tour operators' cash flow and commercial viability.
APRA provides guidance for ADIs on indemnities in divestment transactions
APRA has released a letter to all ADIs providing guidance on managing the risks associated with indemnities in divestment transactions. APRA's letter notes its expectation that indemnities granted in the context of an M&A divestment transaction that create a material contingent liability should be subject to board review and approval and ongoing senior management oversight to ensure appropriate management of risk. In particular, APRA expects that:
- indemnities will be appropriately capped and time limited (noting that uncapped indemnities are inconsistent with prudential requirements);
- indemnity types will be distinguished to reflect different risk profiles of the underlying exposures;
- governance arrangements and accountabilities are clearly defined to ensure appropriate oversight and control (both in setting indemnities and in monitoring and influencing underlying risks post-transaction);
- ADIs will assess the need for appropriate provisions at inception and through the life of the indemnity; and
- ADIs will hold an appropriate level of operational risk capital for the financial risks associated with indemnities. ADIs are expected to engage APRA to demonstrate the appropriateness of risk capital treatment.
Impending AFS Licence changes for foreign financial service providers
Foreign financial service providers will no doubt be aware of the impending repeal of the 'limited connection relief', the end of the transition period for the 'sufficient equivalence relief', and the introduction of a new 'Foreign AFS' licensing regime and a new 'Funds Management Financial Services' relief, from March 2022. These changes will require a number of foreign financial service providers to apply for a Foreign AFS Licence or a standard AFS Licence, depending on their circumstances, in order to continue providing financial services in Australia from April 2022. While the transitional period has almost 12 months to run, it is expected that applications for Foreign AFS Licences will take 6-8 months just to obtain regulatory approval, so foreign financial service providers need to consider their position now. You can read more about these changes in our Insight: Less than one year before the new foreign financial services providers regime begins.